The NASPP Blog

Just this morning, the House Ways and Means Committee Chairman issued a press release announcing additional changes to the House’s tax reform bill.  The changes include removing the section of the bill that would change the tax treatment of NQDC, including stock options and RSUs.

So here’s where things stand with the areas of the bill that I have covered in my blogs this week:

Section 3801: Nonqualified Deferred Compensation

Based on the summary of the Chairman’s most recent mark-up of the bill, this section is removed in its entirety. Thus, the bill would not change the tax treatment of stock options, RSUs, or other nonqualified deferred compensation.

Section 3802: Modification of Limitation on Excessive Employee Remuneration

This section is still in the bill. It redefines who is a covered employee for purposes of Section 162(m) and makes stock options and performance awards subject to the $1 million deduction limitation. See my blog on Tuesday (“Tax Reform Targets 162(m)“) for more information.

Section 3804: Treatment of Qualified Equity Grants

The section is still in the bill. It creates a new type qualified equity award referred to as “Qualified Equity Grants” that would allow employees in private companies to defer taxation of stock options and RSUs for up to five years.  See my blog from this morning (“Tax Reform Update“) for more info.  The Chairman’s mark includes some technical amendments to the language of this section, but the intent of it does not appear to have been changed.

What’s Next?

At this time, we are still awaiting the Senate version of the bill. There’s some preliminary information available about it but we’re going to have to wait for the full bill to know if it makes any changes to stock compensation. I will keep you updated.

– Barbara